Sell the rally? Weak dollar pulls market another leg higher

If you don't think a weaker dollar is not the major factor in Thursday's market rally, look at Caterpillar up 2.5 percent today and more than 4 percent since the Fed announcement at 2 p.m. on Wednesday, despite a profit warning that reduced first quarter earnings by 30 percent. Huh?

CAT is not alone. Look at a small sample of materials and energy stocks since the Fed's Wednesday announcement (as of 1 p.m., Thursday)

On the weak dollar we have seen: 1) the Dow and S&P 500 move into positive territory, and 2) new highs expand at the NYSE.

Will this last, or should traders sell the rally? I can't help but think it won't last, since the dollar will surely start to strengthen as we get near June and the next Fed press conference, where they are likely to hike 25 basis points.

By the way, I keep hearing that if the Fed does not hike in June, the next chance for a rate hike won't come until December because it's unlikely they would do it in September, so close to the election.

Sorry, that's just not true. Has the Fed ever raised rates in September in a presidential election year? In September 2004, the Fed raised the Fed funds rate 25 basis points to 1.75 percent.